Is America Going Broke?

“Obama has promised to halve the the US deficit by 2013, but nobody seems to know how he’ll manage it.” Prospect Magazine on the uncertain future of the American current account. “The finances of the world’s biggest economy are showing increasing signs of distress. At the end of June, US borrowings stood at a record $14 trillion: more than the total for the eurozone as a whole. Is America bust? Its debt burden is still a smaller proportion of its economy than many European countries (just under two thirds of GDP, as opposed to 115 per cent of GDP in crisis-stricken Greece, and over 70 per cent in Germany and France). But the US deficit is nowhere near its peak: the IMF estimates that, on present policies, debt will reach 95 per cent of GDP by 2020 and, as its ageing population needs more spending on health and social security, it could hit 135 per cent by 2030 and continue to rise thereafter.”